Picture of health

Insurance IT firm booms as Obamacare begins new year

It's getting harder to track down Clint Jones and Brandon Cruz these days. The co-founders of GoHealth Inc. could be in one of three buildings on Huron Street, another that's around the corner on Superior Street or down the road at the Merchandise Mart.

They're not in hiding. The company is bursting at the seams, thanks in part to the Affordable Care Act, which began its second year of signups Nov. 15.

Headcount, mostly seasonal agents who handle health insurance signups from fall to early spring, has soared to 1,400 from about 950 a year ago. More than 600 are full-time workers, including 100 hired in the past year. Revenue is on pace to top $100 million this year, up from $80 million in 2013.

“We should have crazy growth the next five years to 10 years,” says Mr. Cruz, who co-founded the company 13 years ago with Mr. Jones.

In addition to selling individual health insurance plans from various carriers from its own website, GoHealth provides Web and call-center services for independent agents. More recently, it has begun providing private exchanges for more than 100 corporate clients, such as credit unions and unions, that want to let their employees shop for insurance coverage. It had fewer than five such customers a year ago. That work will bring it into competition with giants such as Aetna Inc., United HealthCare Services Inc. and Aon PLC.

“They know what they're doing, but it's tough to play in both arenas,” says Joe Donlan, president of Connected Health LLC, a Chicago-based exchange provider to employers.

GoHealth got more than its fair share of new customers because of the Affordable Care Act. It was one of the few government-approved private insurance exchanges able to enroll customers when HealthCare.gov stumbled out of the gate.

We're in no rush to sell the company. We'd hate to sell too early when we have all this opportunity. But there's no shortage of people asking. We just tune them out.

“One of the keys is their technology platform,” says Steve Rubis, a Washington-based analyst at Stifel Nicolaus & Co., a brokerage and investment bank. He estimates that GoHealth signed up more than 200,000 customers during the first round of signups under the Affordable Care Act, compared with 10,000 for eHealth Inc., a public company based in Mountain View, California, that is the biggest player in the individual online health insurance market. Mr. Rubis figures GoHealth was getting nearly 1 million unique online visitors in March, the deadline for signups under the health care law, compared with 1.6 million for eHealth.

WAVE OF DEALS

The Affordable Care Act has uncorked a wave of deals in the health insurance technology space, such as Aetna's recent $400 million acquisition of Chicago-based Bswift LLC, which makes software to run exchanges and other insurance programs. The deal came just seven months after 15-year-old Bswift raised $51 million in private equity.

The comparison to Bswift isn't lost on the GoHealth founders, who raised $50 million two years ago from Minneapolis-based venture fund Norwest Equity Partners.

“We're in no rush to sell the company. We'd hate to sell too early when we have all this opportunity,” Mr. Cruz says. “But there's no shortage of people asking. We just tune them out.”

GoHealth recently subleased another 42,000 square feet and now occupies more than 165,000 square feet across five buildings in River North. It's a far cry from the tiny office on Morgan Street where the company got its start, before the Near West Side became a tech hub.

“It's harder to get everyone together for company meetings now,” Mr. Jones laments. “We used to be able to just go to a bar.”

As it gears up for Obamacare's second act, GoHealth has reduced the time to sign up a customer from 45 minutes to just seven. Using algorithms and predictive analytics, GoHealth focused on which questions are most important, reducing the queries from 30 pages to less than five. Software automatically recommends the best plan choices, rather than rely on an agent to sort through as many as 100 plans and make suggestions.

With the U.S. Supreme Court set to review the Affordable Care Act's subsidies in states like Illinois that depend on the federal government's exchange, one of GoHealth's meal tickets could be jeopardized. But the company is chasing what it sees as a bigger long-term shift in health insurance in which individuals have more responsibility for purchasing and managing their coverage, similar to the shift in retirement benefits from pensions to 401(k) plans.

“There are 40 million people who are uninsured and 40 million small groups,” Mr. Cruz says. “You'll see them go to exchanges.”